74 https://journals.urfu.ru/index.php/r-economy R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 Online ISSN 2412-0731 Original Paper © Celetti, D., 2020 doi 10.15826/recon.2020.6.2.007 Small businesses in the global market: evidence from the fashion system of Vicenza province (Italy) D. Celetti University of Padua, Padua, Italy; e-mail: david.celetti@unipd.it ABSTRACT Relevance. The paper seeks to explore how small and medium handicrafts can successfully compete in the globalized market. It questions, in particular, the rele- vance of the territory, of industrial districts and of the use of information technol- ogy to create innovative approaches to production and marketing, and consolidate the territory’s competitive position in global value chains. It highlights actual via- ble strategies for small and medium businesses operating in particularly complex sectors like those that are part of the “fashion system”. Thus, the article deals with an important part of the national industry in the moment of world-wide crisis. Research Objective. The article discusses successful strategies of small firms in clothing and fashion industry. Its purpose is to verify if and how handicrafts op- erating in the sectors particularly exposed to international competition succeed in competing effectively in international markets. The study tests the thesis that local dimension does not necessarily represent a disadvantage in the age of glo- balization and that even handicrafts can play at the international level. The study also verifies the role of territory in granting unique competitive advantage in the global market. Data and Methods. The methodological approach combines ana- lysis of statistical data with four case studies. The work combines analytical and empirical approaches to highlight how a single business can reach levels of excel- lence in troubled markets. Results. The study demonstrates that handicrafts can find spaces for growth in such declining sectors as cloth production in developed countries, provided that they succeed in focusing on niche markets through pro- cess, product, and marketing innovations; in using up-to-date technology; and in exploiting territorially embedded values. In this context technology emerges as a strategic tool as it lowers transaction costs and entrance barriers, offers innova- tive opportunities for re-organizing production processes, and enlarges potential markets. Industrial districts, then, continue to represent a viable strategic advan- tage in terms of flexibility, know-how, and cooperation. Finally, the brand “made in Italy” confirms its status as an internationally recognized synonym of quality and fashionable design, opening companies the way to high level, luxury niches. KEYWORDS textiles, fashion, clothing, industrial districts, handicraft, made in Italy, economic history ACKNOWLEDGEMENTS The research was supported by the project “The Economy of Excellence. Italian Handicraft in the International Networks: Traditional Knowledge, Technological Innovation and Communication Strategies (19th – 20th Centuries)”, University of Padua (IT), Department of Historical, Geographical Sciences and of the Antiquity. FOR CITATION Celetti, D. (2020) Small businesses in the global market: evidence from the fashion system of Vicenza province (Italy). R-economy, 6(2), 74–88. doi: 10.15826/recon.2020.6.2.007 Малые предприятия в глобальном рынке: пример сектора моды провинции Виченца (Италия) Д. Челетти Падуанский университет, Падуя, Италия; e-mail: david.celetti@unipd.it АННОТАЦИЯ Актуальность. Статья посвящена изучению того, как малые и средние ре- месленные изделия могут успешно конкурировать на глобализированном рынке. В ней рассмотрены, в частности, роль территории, промышленных районов и использования информационных технологий для создания инно- вационных подходов к производству и сбыту, а также для укрепления конку- рентоспособности территории в глобальных цепочках создания стоимости. Освещены актуальные жизнеспособные стратегии для малого и  среднего бизнеса, работающего в особенно сложных секторах, таких как те, которые являются частью «системы моды». Таким образом, статья посвящена важ- ной части итальянской промышленности в момент мирового кризиса. Цель исследования. В статье рассматриваются стратегии малых фирм в инду- стрии одежды и моды. Цель исследования состоит в том, чтобы проверить, успешно ли эти фирмы конкурируют на международных рынках. В исследо- вании проверяется тезис о том, что размер фирмы не обязательно является КЛЮЧЕВЫЕ СЛОВА текстиль, мода, одежда, кластеры, ремесленная продукция, макроэкономика, экономическая история http://doi.org/10.15826/recon.2020.6.2.007 http://doi.org/10.15826/recon.2020.6.2.007 mailto:david.celetti@unipd.it mailto:david.celetti@unipd.it R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 75 https://journals.urfu.ru/index.php/r-economy Online ISSN 2412-0731 БЛАГОДАРНОСТИ Исследование было поддержано проектом «Экономика совершенства. Итальянское ремесло в международных сетях: традиционные знания, технологические инновации и коммуникационные стратегии (XIX – XX века)», Университет Падуи (ИТ), факультет исторических, географических наук и античности. ДЛЯ ЦИТИРОВАНИЯ Celetti, D. (2020) Small businesses in the global market: evidence from the fashion system of Vicenza province (Italy). R-economy, 6(2), 74–88. doi: 10.15826/recon.2020.6.2.007 недостатком в эпоху глобализации и что даже ремесленные фирмы могут эффективно играть на международном уровне. Статья также подтверждает роль территории в предоставлении уникального конкурентного преимуще- ства на мировом рынке. Данные и методы. Методологический подход объе- диняет теоретическое обсуждение выбранной научной литературы и стати- стических данных с углублённым анализом четырёх фирм. Работа сочетает в себе аналитические и эмпирические подходы, чтобы подчеркнуть, успеш- ные стратегии отдельных фирм. Результаты. Исследование показывает, что ремесленные фирмы могут найти пространство для роста в таких сокраща- ющихся секторах, как производство одежды в развитых странах, при усло- вии, что им удастся сосредоточиться на нишевых рынках с помощью инно- ваций в процессах, продуктах и маркетинге; в использовании современных технологий; и в использовании территориально заложенных ценностей. В  этом контексте технология становится стратегическим инструментом, поскольку она снижает операционные издержки и входные барьеры, пред- лагает инновационные возможности для реорганизации производственных процессов и расширяет потенциальные рынки. Таким образом, промыш- ленные районы продолжают представлять собой жизненно важное страте- гическое преимущество с точки зрения гибкости, ноу-хау и сотрудничества. Наконец, бренд «Сделано в Италии» подтверждает свой статус признанного во всем мире синонима качества и модного дизайна, открывая компаниям путь к нишам класса люкс высокого уровня. Introduction The Italian fashion system, even its most dynamic clusters, suffered from the prolonged decline of the early 2000s. Though traditionally strong and playing for decades a leading role in domestic economy, it started losing firms, em- ployees, and turn-over. The negative trend af- fected both small and big companies in all the country’s regions, including North-Eastern ones, where textile manufactures have been strongly present since Venetian time (Fontana, 2004), and lived world-known success stories, such as the Rossi, Marzotto, Stefanel, or Benetton (Belussi, 1992; Rovizzi, 1992; Tait, 1998; Fontana, 2005; Favero, 2012). Within this broadly adverse trend, there is, however, evidence of single firms ha- ving managed to re-organize their own business and develop innovative strategies within rentable niches (Bettiol, 2015). The paper aims at enhanc- ing our understanding of the possibilities of re- action of small and medium enterprises (SMEs) operating in highly competitive markets com- bining analysis of empirical data and case study methods. Our main goal is to verify if and through which approaches small businesses can withstand unfavorable economic trends and compete suc- cessfully in global markets. The paper investigates, in particular, how handicrafts succeed in changing the ‘traditional rules of the game’ in their favour through marketing, product, and process reorga- nization. The research has focused on the fashion and clothing sector in Vicenza province because of its relevance in regional and national economy; its historical importance; its recent critical trends in terms of turnover, number of firms, and em- ployees. The case studies of individual firms, on the other hand, have been selected because they represent clear examples of small family-run artisanal businesses successfully operating in complex environments. The reference period of the paper is 2000–2018, which overlaps with the economic stagnation following the European monetary union, the 2008 financial crisis, and the following restructuring of the world economy. The study is divided into three parts. First of all, it provides a critical review of selected litera- ture on the formation of the clothing and fashion industry in Vicenza province, of its development, of its strengths and weaknesses. Then we recon- struct, through statistical and empirical analysis, the sector’s most recent trends, focusing on firms’ strategies to counteract negative economic condi- tions. It concludes by explaining how SMEs can, within certain conditions, find successful strate- gies in the time of enduring crisis, when the mar- kets are shrinking. Literature review The so-called ‘fashion system’ includes busi- nesses producing clothing and accessories. It tra- ditionally represents a core sector of the national economy in Italy (Paris, 2006; Merlo, 2011). Even nowadays, though significantly reduced in scope in comparison with the 1990s, it still holds a rele- vant position in Italian industrial production and international trade (Paris, 2006; Merlo, 2015). http://doi.org/10.15826/recon.2020.6.2.007 76 https://journals.urfu.ru/index.php/r-economy R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 Online ISSN 2412-0731 Researchers explain such results by stressing his- torical and culturally embedded entrepreneurial skills and by pointing out the ability of Italian firms to interpret and mould consumers’ prefer- ences (Scarpellini, 2019; Belfanti, 2015; Merlo, 2012). Scholars also highlight Italian firms’ capa- city to play successfully within global value chains, upgrade their position effectively, use the possi- bilities offered by collaboration with internatio- nal brands and buyers, and promote collabora- tion at the district level (Dunford, 2006; Merlo, 2018; Bettiol, 2017). The latter aspect emerges es- pecially strong among little enterprises operating within close territorial boundaries, such as the tex- tile districts located in Veneto (Bettinelli, 2016). Studies on Veneto’s and Vicenza’s ‘fashion sys- tem’ focused first of all on its century-long histo- ry; on the role of industrial districts and clusters; and on its resilience to market transformation and crisis. The sector experienced a remarkable deve- lopment from the late Middle Ages, when home spinning and weaving where inserted in highly competitive, proto-industrial networks (Riello, 2013; Caracausi, 2017. From the early 19th cen- tury it was deeply industrialized, and major fac- tories, often integrated into company towns in the pre-alpine area, transformed economy, land- scape and social life (Fontana, 2004; Roverato, 2004, Leoni, 2017). The process, however, didn’t substitute home-based production. Industri- al plants and independent spinners and weavers established complementary relations (Fontana, 2009; Celetti, 2015). Similarly, industrial and ag- ricultural work coexisted at family level within pluri-activity frameworks, adding resilience to local societies and competitiveness to major com- panies (Fontana, 2005; Celetti, 2015). In that pe- riod there emerged features that still characterize the regional economy and landscape, such as the so-called ‘diffused industrialization’, shops and cultivated fields, rural and industrial areas fol- lowing each other without solution of continui- ty (Ferrario, 2013; Belfanti, 2013; Celetti, 2019). From the 1960s, the ‘subcontracting revolution’ increased dramatically the number of little facto- ries, large firms externalizing labor intensive pro- duction phases to focus on conception, design, marketing, and commercialization (Belussi, 1992; Ketelhöhn, 1993; Favero, 2012). Downscaling and reorganization processes induced, as we stressed, the emergence of numerous small subcontractors, which, by the 1980s, contributed to the forma- tion of internationally competitive clusters, where shops specialized in different parts of the produc- tion chain, built synergies with those working in related sectors (e.g. machine building) and with larger companies controlling the strategic parts of the value chain and promoting international brands (Coro’, 1999; Mistri, 2009). There is vast research literature on cluster and industrial districts1 (Cainelli, 2008; Bettiol, 2019). Of particular interest for our research are the studies on the role of the territory as a complex asset for competitiveness (Lacquement, 2016) as well as on the latest transformation of indust- rial districts in the fast changing and globalizing economy (Brioschi, 2002; Mariotti, 2020). Studies highlight the financial and managerial limits of the ‘small-scale’ factories (Whitford, 2001); their resilience to crisis (Coro’, 2010; Busato, 2011); and the effects of delocalization and offshoring practices on districts and clusters (Tattara, 2010; Coro’, 2013). For our research particularly in- teresting are the studies on the reaction capaci- ties of clusters, and, generally speaking, of SMEs operating in linked sectors. These studies stress the role of territory in enhancing resilience, on the one hand, and in building viable positions within global commodity chains, on the other (Coro’, 2007; Volpe, 2012; Camagni, 2013; Buci- uni, 2018; Barzotto, 2018). In that context, terri- tory assumes a central role as a source of material and immaterial assets, including the exploitation of the brand “Made in Italy” as a world-wide recognized insurance of upper class design, aes- thetic and quality (Lees-Maffei, 2004; Gilm- ore, 2007; Fontana, 2010; Balland, 2015; Celetti, 2019b). This study draws in particular from these studies and highlights how small handicrafts op- erating in the sector that is particularly exposed to global competition can reach excellence, namely by creating unique quality and using territorial- ly-based competitive advantages. Methodology Methodologically, the work unites quantita- tive analysis of statistical data with qualitative, empirical observations gained from interviews and from field research of production proces- ses. The combination of these approaches gives us insights into the strategies that small handi- crafts follow for building their success stories in declining and turbulent markets. 1 On differences between the two concepts cfr. Porter, 2009; Ortega-Colomer, 2016. http://doi.org/10.15826/recon.2020.6.2.007 R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 77 https://journals.urfu.ru/index.php/r-economy Online ISSN 2412-0731 We used statistical data to reconstruct the sector’s trends of textile, clothing, and leather pro- duction at the provincial level2. The data have been obtained from Istat3, ICE4, and UnionCamere-In- foCamere5 official publications. The four case studies we discuss further have been selected by the joint team of Padua Uni- versity and Confartigianato Vicenza6 among the 529 clothing and fashion firms that are members 2 These activities are classified within Istat – Ateco (eco- nomic activity) classification numbers 13, 14, and 15 (2007), excluding 15.11 (leather and fur preparation). 3 Italian Statistical Institute (www.istat.it). 4 Italian Institute for Foreign Trade (www.ice.it). 5 Information and Statistical Service of Italian Chamber of Trade (www.unioncamere.gov.it › infocamere). 6 “Confartigianato Vicenza” is an association of small and medium handicraft firms operating in Vicenza (https://www. confartigianatovicenza.it). of the above-mentioned Association on the ba- sis of four parameters: dimension; production’s specialization; location; and competitive success in the global market (Tables 1 and 2). The field research has been realized by working with the interviewees and entailed visits to the shops; re- construction of the business process; acquisition of the ‘grey material’, such as brochures, photo- graphs, newspaper articles; and formal, recorded interviews with companies’ founders, owners, directors, and selected personnel. The interviews were based on questionnaires divided into five parts (the firm’s history and recent development; business models; strengths; critical issues; and prospects) with a focus on the relevance of the firms’ dimension, the value of the ‘made in Italy’ brand, and the role of the territory’ in the time of globalization. Table 1 Case Studies Main characteristics Arca di Noe’ (A) Vicenza Mode (V) La Pony Confezioni (P) Four Horses (F) Denomination, Address, Web-site L’ARCA DI NOE’ SRL – UNIPERSONALE Via Rambolina 31/ B – 36061 Bassano Del Grappa (Vicenza -Italy) – no web site VICENZA MODE SRL – Via delle Industrie, 78, 36050 Cartigliano (Vicenza Itally) – https:// www.vicenzamode.com LA PONY CONFEZI- ONI SNC – via della Cooperazione, 19 36025 Noventa Vicentina (Vi- cenza – Italy) https://www.lapony.it/ For Horses SRL – Via J.F. Kennedy 59 – San Vito di Leg. (VI – Italy) https://forhorses.it/ Branch Outwear, in particular using technical fabrics and heating tape technol- ogies for brands working in high quality, ready to wear segments (designer/ diffusion) Knitwear manufacturing for brands working in high quality, ready to wear segments (designer/ diffusion) Production of men’s and women’s trousers Production of equestrian outwear and accessories Years of activity 34 30 (following the trans- formation of the preced- ing family business in the same sector created in 1970) 39 (founded in 1980) 18 (founded in 2002) Employees 26 part-time employees (20 hours a week) 60 full-time employees 30 full-time employees 15 Production process Cutting, tailoring, wash- ing, ironing, testing, and shipping Choice of yarn, weaving, cutting, tailoring, wash- ing, ironing, testing, and shipping Cutting, tailoring, wash- ing, ironing, testing, and shipping. The firm also offers projecting and testing services Cutting, tailoring, wash- ing, ironing, testing, and shipping Markets and clients Final product for major brands of the interna- tional fashion system working in high quality, ready to wear segments (designer/diffusion) Final product for major brands of the interna- tional fashion system working in high quality, ready to wear segments (designer/diffusion) Final product for major brands of the interna- tional fashion system working in high quality, ready to wear segments (designer/diffusion) Final product sold world- wide under its own brand to buyers, distributors, shops, and private clients (riders), also on-line Source: Interviews to Roberto Sartori (Arca di Noe’ SRL), interviewed by David Celetti, September 20th, 2018 at the firm’s offic- es, Via Rambolina 31/B, Bassano Del Grappa (Vicenza, IT): Riccardo Garbosso (Vicenza Mode SRL), interviewed by David Celetti, September 20th, 2018 at the firm’s offices, Via delle Industrie 78, Cartigliano (Vicenza, IT); Riccardo Barbato (La Poni Confezioni SNC), interviewed by David Celetti, September 20th, 2018 at the firm’s offices, via della Cooperazione, 19, Noventa Vicentina (Vi- cenza, IT); Andrea Piovan (For Horses SRL), interviewed by David Celetti, March 14th, 2019 at the firm’s offices, Via Kennedy 59, San Vito di Leguzzano (Vicenza, IT). http://doi.org/10.15826/recon.2020.6.2.007 http://www.istat.it http://www.ice.it https://www.confartigianatovicenza.it https://www.confartigianatovicenza.it 78 https://journals.urfu.ru/index.php/r-economy R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 Online ISSN 2412-0731 Table 2 Case studies results (A: Arca di Noe’ – V: Vicenza Mode – P: La Pony Confezioni – F: For Horses). Origins and Development Business Model Strengths Critical Issues Prospects Family business di- rectly managed by the owner (A, P, V, F) Subcontractor furnishes the final product and operates in all the phases of the production chain (V) or from cutting downwards (A, P). The business process includes projecting and prototyping (A, P, V, F) The firm operates with its own brand, selling directly to distributors or final clients (F) Extremely high quality, versatility and flexibili- ty (A, P, V) Technical competenc- es for professional riding necessities with attention to style and fashion (F) Difficulty in finding highly qualified per- sonnel at all levels (A, P, V, F) Building continu- ously in knowledge, skills, and know-how as instruments for enhancing quality and service (A, P, V, F) The owner is: A. Former manager of a big textile company (A) B. Son of the founder with technical experi- ence in the sector (P, V). C. A former technician in a chemical company and a former design- er of classical dance outwear Offer includes counsel- ing services to current or potential clients (A, P, V, F) Original production process management – Innovative organiza- tion model based on remote team work with the clients (V, P) – Innovative organi- zation model using part-time to enhance flexibility (A) – Coexistence of high technology, technical innovation and handi- craft approaches (F) Keeping the perceived value of the ‘Made in Italy’ brand with enhanced protection of the brand (A,P,V, F) Process and product innovation, uniting tradition and technol- ogy (A,P,V, F) The firms have been constantly moved towards the upper mar- ket’s segments and are now positioned in the luxury fashion segment (A, P, V) Product specialization on knitwear manufac- turing (V), trousers (P), technical outwear (A), equestrian outwear (F) Highly qualified personnel in measur to work manually and exploit at the same time the highest technology (A, P, V, F) Keeping enough firms working in the terri- tory and building up more effective policies for maintaining ‘the vitality’ of the clothing and fashion industrial district (A, P, V, F) Focusing on luxury brands for limiting price competition (A, P, V) Enhancing its visibil- ity at world level in the niche market also exploiting IT (F) The firms have been operating in the niche segment since the very beginning (F) Focus on the highest market levels. Clients are international renowned luxury fashion brands (A, P, V) Clients are professional and high-level amateur riders served directly or through distributors worldwide, the domestic market remaining mar- ginal (F) Upper-class services, including innovation, and problem-solving, which helps to build long-term relations with clients (A,P,V, F) Keeping very close long -term relations with fashion luxury brands, which are linked not only to the firm’s per- formance, but also to the values ‘embedded’ in the territory (A, P, V) Communicate effec- tively the tangible and intangible (cultural) values of the “made in Italy” brand and of the regional textile districts (A, P, V, F) Strong links with French luxury brands: show- room in Paris, and valu- able products’ archive (V) Strong links to the American market: office in Miami (F) The production is total- ly under the ‘Made in Veneto’ brand, exploit- ing the territory as a competitive advantage (A, P, V, F) Source: Interview with Roberto Sartori (Arca di Noe’ SRL) conducted by David Celetti, September 20th, 2018 at the firm’s office, Via Rambolina 31/B, Bassano Del Grappa (Vicenza, IT): interview with Riccardo Garbosso (Vicenza Mode SRL) conducted by David Celetti, September 20th, 2018 at the firm’s office, Via delle Industrie 78, Cartigliano (Vicenza, IT); interview with Riccardo Barbato (La Poni Confezioni SNC) conducted by David Celetti, September 20th, 2018 at the firm’s office, via della Cooperazione, 19, Noventa Vicentina (Vicenza, IT); interview with Andrea Piovan (For Horses SRL) conducted by David Celetti, March 14th, 2019 at the firm’s office, Via Kennedy 59, San Vito di Leguzzano (Vicenza, IT). http://doi.org/10.15826/recon.2020.6.2.007 R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 79 https://journals.urfu.ru/index.php/r-economy Online ISSN 2412-0731 Results Vicenza’s ‘fashion system’ (textile, clothing, leather) manifests evident degrees of territori- al specialization within one of the most indus- trialized Italian provinces (Table 3). This aspect is clearly highlighted both by ISTAT analysis of the sector’s districts7 and by that of BancaIntesa (BancaIntesa 2018, 126, 205). Firms of the fashion sector are mainly concentrated in the South-East- ern part of the territory (municipalities of Barba- rano and Noventa) and in the ‘traditional textile centers’ of the medium and northern communes, such as those of Thiene, Bassano, and Marostica. Similar results are obtained applying the ‘econom- ic specialization index’ (Palan, 2010) to the hand- icraft shops operating in single municipalities. In 2017, the index showed concentration rates of 0.141–0.300 (7 municipalities) and 0.301–1.000 (2 municipalities), namely in the South-Eastern and Central areas of Vicenza province (Figure 1). However, no municipality has rates higher than 1.000, which theoretically correspond to the pres- ence of an industrial district. This configuration is the consequence of both the 1990s transfor- mation, marked by diffused delocalization, and of the crisis of the two last decades, which, in the way similar to the national trends8 (Banca Intesa, 2018) heavily influenced the territorial economic structure, reducing the number of active handi- crafts and therefore lowering the concentration index itself (Figure 1). 7 ISTAT 2001. 8o Censimento generale dell’industria e dei servizi. Distretti indusrtiali e sistemi locali del lavoro. (53–95) (https://www.istat.it/it/files/2011/01/Volume_Distretti1.pdf ); ISTAT 2011. 9o Censimento dell’industria e dei servizi e Censi- mento delle istituzioni non profit. I distretti industriali. (42–50) 8 ISTAT 2011. 9o Censimento dell’industria e dei servizi e Censimento delle istituzioni non profit. I distretti industriali. (25); ISTAT 2018. Rapporto Annuale 2018. La situazione del Paese (57–72) Figure 1. Concentration index of textile and clothing handicraft in Vicenza (2017 – Dark Blue 0.301-1; Blue 0.141-0.3: Light Blue less than 0.140; white 0) Source: Confartigianato Vicenza – Elaborazione Flash 04/03/2020 However, in contiguous territories we still notice the presence of numerous firms operating in different parts of the production chain. Prox- imity represents an important competitive advan- tage at provincial level. It enhances the sector’s capacity to respond positively to the demand of flexibility, quality, and ‘customization’ of the final buyers, optimizing production processes through inter-company cooperation. It fosters innovation, mutual learning, and knowledge spillover. It in- creases resilience to any sudden variations of de- mand. Areas with higher concentration indexes, therefore, better react to crisis and faster develop new business approaches (Balland, 2015). This as- pect appears all the more as a strategic asset if we take into account that the main business model Table 3 Gross Domestic Product (mln euro) of Vicenza Province, Veneto Region and Italy GDP/Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 VICENZA 21 971 23 590 24 018 24 219 25 470 25 113 24 464 25 125 26 157 25 883 26 302 26 603 27 125 VENETO 124 288 130 716 133 488 140 576 147 009 145 923 142 364 145 053 149 642 147 215 147 317 149 888 151 791 Perc. Vi- cenza GDP vs Veneto’s GDP 17,68 18,05 17,99 17,23 17,33 17,21 17,18 17,32 17,48 17,58 17,85 17,75 17,87 ITALIA 1 335 354 1 390 539 1 436 379 1 493 031 1 554 199 1 575 144 1 573 655 1 604 515 1 637 463 1 613 265 1 604 599 1 621 827 1 645 439 Perc. Vene- to GDP vs Italy’s GDP 9,31 9,40 9,29 9,42 9,46 9,26 9,05 9,04 9,14 9,13 9,18 9,24 9,22 Sources: Author’s own calculations by using the data from Vicenza Chamber of Trade (https://www.vi.camcom.it/it/servizi/ statistica-e-studi/tabelle-statistiche-dati-settoriali.html) http://doi.org/10.15826/recon.2020.6.2.007 https://www.istat.it/it/files/2011/01/Volume_Distretti1.pdf https://www.vi.camcom.it/it/servizi/statistica-e-studi/tabelle-statistiche-dati-settoriali.html https://www.vi.camcom.it/it/servizi/statistica-e-studi/tabelle-statistiche-dati-settoriali.html 80 https://journals.urfu.ru/index.php/r-economy R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 Online ISSN 2412-0731 of Vicenza’s fashion system is ‘contract manufac- turer’. The option is one of the consequences of the outsourcing processes of major companies in the 1960s and 1970s. Traditionally, artisans pro- duce parts of the final product according to the quality standards set by the client. Their focus is therefore on the production process, which only rarely includes projecting and development (de- sign, prototype, collection, etc.). However, in the recent years, the latter is becoming a part of the “upgrading” strategies of successful handicrafts. In any case, proximity and cooperation are essen- tial strategic tools for subcontracting firms (Betti- ol, 2017; Magnani, 2019). As we have seen, the relatively low concentra- tion index also mirrors the sector’s crisis and trans- formations that diminished the number of active firms. Since the late 1980s, when it reached its heights, clothing industry has endured significant changes under the pressure of fierce international competition on the part of developing countries (Figure 2). At provincial level, active handicraft firms went from 1,315 in 2009 to 1,113 in 2018, showing a reduction of more than 15 %, which reflects regional (–16,12) and national (–15.42) trends (Figures 3 and 4). Although it is difficult to make comparisons throughout the whole peri- od due to the modification in the classification of sectors in 2008, figures show that the reduction in the number of firms has been an ongoing tendency since the beginning of the 21st century, suggesting structural rather than conjuncture trends (Table 4, Figures 5, 6 and 7). Similarly, the evolution of handicrafts’ labor levels underwent a negative evo- lution (Figure 8) whereas the number of workers per production unit remained stable (7,29 in 2012 and 7,25 in 2028). This might suggest the limits of increasing productivity through the process of reorganization and/or technologic innovation in the sector where labor remains a central asset. At national level, for example, only 11.9 per cent of fashion firms operating in industrial districts show excellent use of IT, whereas the average industry level reaches 16.6 (Banca Intesa, 2018, 134). 160 140 120 100 80 60 40 20 0 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 Figure 2. Total production index of Italy’s clothing and fashion industry (2004 = 100). Source: http://seriestoriche.istat.it/ 900 800 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Figure 3. Number of active artisan companies in the clothing (red) and textile (blue) sectors Sources: the author’s own calculations based on Infocamere Data (Economic Sectors DB17: textile industries; DB18 Clothing Production including furs – https://www.info- camere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/ content/cerca-tabelle-movimprese?inheritRedirect=false) 800 700 600 500 400 300 200 100 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Figure 4. Number of active artisan companies in the clothing (red), leather and textile (blue) sectors Source: the author’s own calculations based on Infocamere data (Economic Sectors B13: textile industries; B14 Cloth- ing Production; B 15: Leather Goods Production – https:// www.infocamere.it/statistiche/-/most_viewed_assets/zaAt- S5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedi- rect=false) Table 4 Clothing and fashion firms. Vicenza Province and Italy Year 2012 2013 2014 2 015 2016 2017 2018 Handicrafts firms (Vicenza Province) 905 870 839 834 831 814 786 Total Firms (Vicenza Province) 1 709 1663 1 634 1 645 1 717 1 617 1 587 Handicrafts firms (Italy) 48 431 47272 46 290 45 617 44 782 44 004 43 092 Total Firms (Italy) 93 973 91 682 89 926 89 030 87 721 86 403 85 177 Source: ISTAT (http://www.coeweb.istat.it/ April 19th 2020), and the author’s calculations http://doi.org/10.15826/recon.2020.6.2.007 http://seriestoriche.istat.it/ https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimp https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimp https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimp https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false http://www.coeweb.istat.it/ R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 81 https://journals.urfu.ru/index.php/r-economy Online ISSN 2412-0731 9 8 7 6 5 4 3 2 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Figure 7. Indexes of natality (green) and mortality (red). Province of Vicenza. All industrial sectors Source: the author’s own calculations based on Infocamere data – https://www.infocamere.it/statistiche/-/most_ viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movi- mprese?inheritRedirect=false) 200 0 –200 –400 –600 –800 –1000 –1200 1 2 3 4 5 6 7 8 9 10 Figure 8. Employees (blue) and variation (red). Province of Vicenza. Fashion System Artisanal Firms Sources: the author’s own calculations based on Ufficio Studi Confartigianato data (Elaborazione Flash 04.03.2020) 14 12 10 8 6 4 2 0 Te xt ile C lo th in g Te xt ile C lo th in g Te xt ile C lo th in g Te xt ile C lo th in g Te xt ile C lo th in g Te xt ile C lo th in g Te xt ile C lo th in g Te xt ile C lo th in g 2001 2002 2003 2004 2005 2006 2007 2008 Figure 5. Indexes of natality (blue) and mortality (red) textile and clothing artisanal firms Source: the author’s own calculations on Infocamere data (Economic Sectors DB17: textile industries; DB18 Clothing Production including furs – https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-ta- belle-movimprese?inheritRedirect=false) 14 12 10 8 6 4 2 0 Te xt ile C lo th in g Le at he r Te xt ile C lo th in g Le at he r Te xt ile C lo th in g Le at he r Te xt ile C lo th in g Le at he r Te xt ile C lo th in g Le at he r Te xt ile C lo th in g Le at he r Te xt ile C lo th in g Le at he r Te xt ile C lo th in g Le at he r Te xt ile C lo th in g Le at he r Te xt ile C lo th in g Le at he r 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Figure 6. Indexes of natality (blue) and mortality (red). Province of Vicenza. Fashion System Artisanal Firms Source: the author’s own calculations on Infocamere data (Economic Sectors B13: textile industries; B14 Clothing Produc- tion; B 15: Leather Goods Production – https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/con- tent/cerca-tabelle-movimprese?inheritRedirect=false) Vicenza’s ‘fashion system’ shows a strong ori- entation to the foreign markets, exports having a relevant share of turnover (Tables 5, 6 and 7)9. The most important clients are European, in partic- ular Germany, France and the UK. Asia, howev- er, is growing much faster as a result of rampant Chinese and, to a lesser extent, Indian demand. 9 Rapporto ICE 2017/2018. L’Italia nell’economia interna- zionale. Roma: Marchesi Grafiche Editoriali (22-24, 38, 45-54). The last two countries, though still considered ‘emerging’, nevertheless, increasingly generate de- mand for high quality, luxury fashion products. The importance of Western countries, in partic- ular France, is also linked to the focus of Italian fashion industry on upper class production large- ly controlled by French luxury brands. Converse- ly, it highlights the diminishing numbers of firms working in medium and low segments, exposed http://doi.org/10.15826/recon.2020.6.2.007 https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false 82 https://journals.urfu.ru/index.php/r-economy R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 Online ISSN 2412-0731 to price competition of emerging countries. The latter suggests that upgrading towards higher seg- ments represents the best possible option for stay- ing in the market (Table 5 and 7). Table 5 Fashion system (including leather). Share in the International Trade of the Province of Vicenza Imports Imports (% on total imports) 2013 2014 2015 2013 2014 2015 1 886 552 2 030 996 2 143 061 22,3% 22,9% 24,0% Exports Exports (% on total imports) 2013 2014 2015 2013 2014 2015 3 857 124 4 102 129 4 358 586 24,7% 25,3% 25,5% Sources: Author’s Elaboration on Data from Vicenza Chamber of Trade (https://www.vi.camcom.it/it/servizi/statis- tica-e-studi/tabelle-statistiche-dati-settoriali.html) Empirical research on case studies confirms the evidence shown by statistical analysis, adding, however, insights into how handicraft reached top positions through innovative interpretation of their business models10. 10 Empirical analysis in mainly based on the interview of Roberto Sartori (Arca di Noe’ SRL) conducted by David Celetti, September 20th, 2018 at the firm’s office, Via Rambo- lina 31/B, Bassano Del Grappa (Vicenza, IT); the interview of Riccardo Garbosso (Vicenza Mode SRL) conducted by David Celetti, September 20th, 2018 at the firm’s office, Via delle In- dustrie 78, Cartigliano (Vicenza, IT); the interview of Riccar- do Barbato (La Poni Confezioni SNC) conducted by David Celetti, September 20th, 2018 at the firm’s office, via della Co- operazione, 19, Noventa Vicentina (Vicenza, IT); interview with Andrea Piovan (For Horses SRL) conducted by David Celetti, March 14th, 2019 at the firm’s office, Via Kennedy 59, San Vito di Leguzzano (Vicenza, IT). The analysis also uses the data from the websites: https://www.vicenzamode.com/; https://www.lapony.it/; https://forhorses.it/. Table 6 Italian Exports Year 2019 2020 Var. % Product tons (1000) Euro (1,000,000) tons (1000) Euro (1,000,000) Difference (%) Difference (%) Pharmaceutical 2 376 26 2 429 25 2,2 –5,1 Automotive 1 400 121 1 463 114 4,5 –6,4 Oil products 866 1 944 1 081 2 403 24,9 23,6 Components and accessories for autonotive 1 071 156 1 060 143 –1,1 –7,9 Shoes 896 17 906 16 1,2 –4,5 Cloths and accessories 820 20 853 22 4,0 12,6 Clothing accessories 781 5 821 5 5,1 7,2 Ship’s and aircraft’s stores and supplies, returned national goods, miscellaneous goods 702 332 711 273 1,3 –17,8 Precious metals including semi-finished goods 388 .. 705 .. 81,5 40,1 Industrial machines 696 32 695 29 –0,1 –9,2 Others 25 742 8 980 25 829 8 694 0,3 -3,2 total 35 738 11 632 36 553 2,3 0,8 EXPORT’S COMPOSITION Pharmaceutical 6,6 0,2 6,6 0,2 Automotive 3,9 1,0 4,0 1,0 Oil products 2,4 16,7 3,0 20,5 Components and accessories for automotive 3,0 1,3 2,9 1,2 Shoes 2,5 0,1 2,5 0,1 Cloths and accessories 2,3 0,2 2,3 0,2 Clothing accessories 2,2 .. 2,2 .. Ship’s and aircraft’s stores and supplies, returned national goods, miscellaneous goods 2,0 2,9 1,9 2,3 Precious metals including semi-finished goods 1,1 .. 1,9 .. Industrial machines 1,9 0,3 1,9 0,2 Others 72,0 77,2 70,7 74,2 total 100,0 100,0 100,0 100,0 Source: ISTAT ( http://www.coeweb.istat.it/ April 19th 2020), and the author’s own calculations http://doi.org/10.15826/recon.2020.6.2.007 https://www.vi.camcom.it/it/servizi/statistica-e-studi/tabelle-statistiche-dati-settoriali.html https://www.vi.camcom.it/it/servizi/statistica-e-studi/tabelle-statistiche-dati-settoriali.html https://www.vicenzamode.com/ https://www.lapony.it/ https://forhorses.it/ http://www.coeweb.istat.it/ R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 83 https://journals.urfu.ru/index.php/r-economy Online ISSN 2412-0731 The four selected case studies (Tables 1 and 2) are family businesses with 15 years of history. Two of them (Vicenza Mode – V- and La Pony – P) have already successfully experienced gener- ational transition, whereas Four Horses (F) and Arca di Noe’ (A) are still managed by founders and do not foresee, at the moment, any trans- fer of competences and duties to younger entre- preneurs. The origins of the business are strictly linked to technical competences and formal per- sonal experiences in major fashion companies or in related sectors in three cases (A, P, F). Only the founder of V had no direct experience in the sec- tor and started his business on the simple assump- tion that the booming demand of the early 1970s would create opportunities for new entrants. The ‘second generation’, which is currently at the head of V and P, obtained higher education and prac- tical hands-on experience before joining the busi- ness. This shows the relevance of personal experi- ence and skills, which might be managerial as in the case of A and P, or linked to specific knowl- edge of product characteristics, as in the case of F (Table 2). We also found that in the time of ex- pansion, the simple feeling of market might play a positive role in entrepreneurial decision-making. Moreover, in all the cases, family emerges as a rel- evant actor, bringing competences and work, but also supporting effective decision-making. This last aspect confirms another central characteris- tic of Vicenza’s – and Veneto’s – industrial system, which can still be considered ‘family based’ and ‘family led’. Each story highlights typical stages of deve- lopment of Vicenza’s fashion clusters. V found its origins in the demand boom of the 1970s in Vene- to’s knitwear production, largely pulled by the success of the brands like Benetton, Stefanel, and their subcontracting strategies. P was founded as a spill-over of Marzotto, when Valdagno-based company started outsourcing labor intensive pro- duction phases. A was also created through com- pany restructuration. What in fact happened is that in the late 1980s, a manager and a group of workers from a struggling major firm, which had to lay off, personnel decided to start their own business. Both of these stories represent, though each in its own way, a successful reaction to mar- ket transformations. F tells the story of its own. The business star- ted in the early 2000s, when Vicenza’s fashion sys- tem already suffered a structural crisis. The firm was established as a result of its founder’s passion for professional riding and his need for technical outwear. From the very beginning, the firm fo- cused on the specific market niche where it ma- naged to combine the technical requirements for professional riders, exclusive textiles, aesthetics, and functionality. The uniqueness of F’s product, and the specificity of the market allowed the firm to create a new brand serving distributors (buyers and retailers) but also delivering directly to pro- fessional riders. A, V and P entered the markets as contrac- tors of major brands and still hold this position. V develops the whole production chain from yarn selection to ironing, testing, and shipping; A and P receive the cloths from their clients, whereas F buys it directly. Having very specific require- ments, F works together with producers of fabric, mainly located in the nearby territory, to conduct research and testing. All firms deliver the final product, ready to be used by the consumer. This last aspect is considered extremely relevant, be- cause it means that these firms avoid ‘hyper-spe- cialization’ (e.g. performing only one task as is the case with Benetton’s contracts) and they can ac- quire competences and know-how, which, in turn, represents the basis for their further progress and consolidation in upper market niches. Quality, specialization on specific textiles, work proce- dures, outwear as well as the capacity to provide Table 7 Exports (1.000 Euro) of clothing and textile handicrafts and clothing and textile industry. Province of Vicenza (2011–17) Sector/Year 2011 2012 Variation 2011–12 (perc.) 2016 2017 Variation 2016–17 (perc.) Variation 2011–17 (perc.) Clothing (including fur and Leather) 1 078,00 1 165,00 9,10 1 239,60 1 227,30 -1,00 13,85 Textiles 464,00 435,00 -6,30 528,50 541,90 2,50 16,79 Total Handicrafts 6 627,00 7 014,00 5,80 7 807,60 8 134,50 4,20 22,75 Total manufactures 14 341,00 14 807,00 3,20 16 604,20 17 536,40 5,60 22,28 Source: the author’s own calculations by using the data from Confartigianato Vicenza Elaborazione Flash 2011–2019 http://doi.org/10.15826/recon.2020.6.2.007 84 https://journals.urfu.ru/index.php/r-economy R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 Online ISSN 2412-0731 additional services, such as technical counseling, are also a way to attract buyers internationally and to expand potential markets. All firms have built over time their own unique competences, which enable them to en- rich the product with particular services. Clients value the company’s providing counseling on fi- bers’ technical and aesthetical characteristics, co-projecting new fabrics, and delivering final products. These activities, on the other hand, are not viewed as a ‘generating income direct- ly’, but as an asset for ensuring customer loyalty; promoting higher results through team work at the early stages of projecting and prototyping; for acquiring new competences; testing new produc- tion methods; and for ensuring constant ‘upgrad- ing’ along the value chain (A, V, P). Similarly, F co-generates outwear and accessories in cooper- ation with professional riders, who actively test them and suggest changes, and with cloth produ- cers, who do not simply receive specific technical and aesthetic requirements from F, but participate in developing them. All the firms consider col- laboration as an essential competitive advantage. Territory plays in this sense a relevant role as it enhances collaboration potential through perso- nal networks and attracts international buyers. Currently all the selected firms are solidly posi- tioned in the highest market segments delivering to world best brands or selling, as F, through its own brand to high class clients. Though all firms are ex- tremely open to international markets, they also have some specific orientations. V, for example, is oriented towards French luxury brands. It opened its own showroom in Central Paris to attract first- class clients as well as to comply to what is seen as a ‘must’ in the luxury fashion world. The reasons why the firm decided to go for the ‘French option’ are explained by the world fame of Parisian brands and by the stability in business relationships, financial reliability, cooperative approaches, and price policy of French multinationals. In this segment, quality matters more than price in building business re- lations. A and P have no offices abroad, but they are also tightly linked to French high-class luxury brands, an option that is justified by highlighting the same advantages as mentioned by V. F, on the other hand, is more concerned with the American market and has opened an office in Miami to serve local riders and distributors. All the firms, general- ly speaking, try to choose their clients, rather than to be chosen by them and to develop cooperation all along the value chain. The selected firms see the near future as a time of complexity, but also of renewed potenti- alities. Mastering complexity is considered the most serious challenge. Complexity is interpreted by interviewees as a trend in contemporary and future markets – products are becoming increas- ingly personalized and they have a shorter life in the context of stricter quality rules and global competition. Managing complexity requires con- stant mastering of new techniques, technological innovation, acquisition of skills and know-how, effective organization. Technology and human capital emerge, therefore, as two pillars for serving successfully the market. IT, for instance, is seen as a strategic tool for developing cooperation both with clients and suppliers, shortening distances, limiting transaction costs, ensuring partnerships rather that competition. Production technolo- gies help to enhance quality and flexibility (Forza, 1997). Labor, however, is still viewed as a central competitive factor, and special attention is given to selection, training, and management of the work- force. For example, A introduced for all its em- ployees 20-hour part-time shifts, which brought some positive results. Quality and productivity increased and at the same time stress and fatigue diminished. The firm also experienced remark- able gains in flexibility as it can now rapidly re- set to regular time in case of higher demand. The workers’ loyalty was improved as it would be dif- ficult for them to find similar conditions in other firms. Major costs, determined by the increased number of workers and machines, have been par- tially absorbed by reduced profits and increased productivity. Finally, all companies confirmed the positive role of the territory in their success in the glob- al market. Although these firms are not officially based in recognized fashion districts, they are nev- ertheless located in areas hosting a relevant number of little shops working in the fashion system. In- terviewees consider that this represents a very im- portant competitive advantage as it adds flexibility, quality, and specialization through inter-firm co- operation; creates social networks allowing circu- lation of ideas, and therefore innovation; attracts major brands that can find diverse specialization within a limited space in the same production chain. The diminishing number of firms operating in the fashion sector is perceived as a major critical issue since it could jeopardize the ‘territorial com- petitive advantage’. Another relevant challenge for the nearby future is to keep enough firms active on http://doi.org/10.15826/recon.2020.6.2.007 R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 85 https://journals.urfu.ru/index.php/r-economy Online ISSN 2412-0731 References Balland, P.A. (2015). Proximity and Innovation: from Statics to Dynamics. Regional Studies, 49(6), 907–920. doi: 10.1080/00343404.2014.883598 BancaIntesa – SanPaolo, (2018). Economy and Finance of Industrial Districts. Annual Report n. 11 (in Italian). Barzotto, M., Corò G., Volpe M. (2017). Global value chains and the role of MNEs in Local Production Systems. In V. De Marchi, E. Di Maria, G. Gereffi (Eds.), Local Production System, Local Clusters in Global Value Chains. Linking Actors and Territories Through Manufacturing and Innova- tion (pp. 94–114). New York: Routledge. doi: 10.4324/9781315182049 Belfanti, C.M. (2013). From rural Industries to Industrial Districts? The Case of Northern Italy from 16th to 20th century. In J.M. Minovez, C. Verna, L. Hilaire Pérez (Eds.) Rural Industries in Medi- eval and Modern Europe (pp. 295–308). Toulouse: Presses Universitaires du Mirail (in French). Belfani, C.M. (2015). Renaissance and “Made in Italy”: Marketing Italian Fashion through Histo- ry (1949–1952). Journal of Modern Italian Studies, 20(1), 53–66. doi: 10.1080/1354571X.2014.973154 Belussi, F. (1992). Benetton Italy: Beyond Fordism and Flexible Specialization. The Evolution of the Network Firm Model. In: S. Mitter (Ed.), Computer-aided Manufacturing and Women’s Employ- ment: The Clothing Industry in Four EC Countries. (pp. 73–91). London: Springer. the territory. A very important goals is to commu- nicate more effectively the tangible and intangible values of the ‘made in Italy’ brand and eventual- ly the ‘made in Vicenza’ brand as a complex set of factors assuring the product’s functional and aes- thetic characteristics. This aspect is seen of utmost importance by the firms, which, even though they deliver a final product, don’t have their own com- mercial brands. In this context, the value of the ‘made in Italy’ brand for the consumer is believed to strongly contribute to attracting international corporations of the fashion sector. Conclusions The research demonstrates that SMEs operating in particularly complex sectors such as the “fashion system” can compete successfully in global markets, provided that they develop strat- egies based on quality rather than price compe- tition; succeed in positioning themselves in high level niches; build collaborative relationships all along the value chain; and exploit the territorial- ly-based competitive advantages. In the last twenty years, textile and acces- sories production went through a severe and long-lasting crisis, mainly due to the growing in- ternational competition from emerging countries, especially China, Eastern Europe, and Northern Africa. This trend deeply affected Italian produc- tion even in its traditionally strong clusters, such as the one located in Vicenza. Firms initially re- acted to this challenge through such cost-saving strategies as delocalizing or investing in labour saving technologies to enhance efficiency. More recently, however, the factors as quality, innova- tion, and flexibility have emerged as the most re- levant ones. This, in turn, opened new possibilities for SMEs to upgrade towards high-level market niches dominated by luxury fashion brands or to create very specific production, such as high-class sport outwear. Consolidation of their positions in such markets, building even tighter relations with demanding clients, and mastering the growing complexity of the modern world are seen as the main objectives of the time. These strategies allow the firms both to keep their business afloat and to continuously upgrade along the global value chains. In the meanwhile, the territory, industrial cluster and districts proved to be crucial in sup- plying the firms with additional competitive ad- vantages. Operating within one territories allows SMEs to cooperate with each other, enhance their flexibility, promote products and ensure innova- tion, creating and diffusing original know-how, skills, and competences. Being located within a relatively small territory such as an industrial dis- trict, businesses are working in similar, comple- mentary, or contiguous phases of the production chain and thus are able to attract international brands. Protecting the reputation of the “made in Italy” as a world-wide known brand linked to a specific territory and maintaining the vitality of handicrafts at territorial levels are, therefore, es- sential challenges for the near future. The study therefore demonstrates that small and medium handicrafts of the fashion system, though exposed to global concurrence, have still space and mar- gins for long term development. http://doi.org/10.15826/recon.2020.6.2.007 http://doi.org/10.1080/00343404.2014.883598 http://doi.org/10.4324/9781315182049 http://doi.org/10.1080/1354571X.2014.973154 86 https://journals.urfu.ru/index.php/r-economy R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 Online ISSN 2412-0731 Bettinelli, C., Bergamaschi M., Kokash, R., & Biffignandi. R. (2016). Process Innovation, Alli- ances, and the Interplay of Firm Age: Early Evidence from Italian Small Firms. International Business Research, 9(50), 86–99. Bettiol, M. (2015). Telling the Made in Italy: A New Link Between Culture and Manufactur- ing (in Italian). Venezia: Marsilio Retrieved from https://tolinoreader.ibs.it/library/index.html#/ epub?id=DT0245.9788831739504 Bettiol M., Chiarvesio M., Di Maria E., & Micelli S. (2017). Manufacturing Comes Back? How Industrial Districts are Dealing with the New Globalization. Economia e Società Regionale = Regional Economy and Society, 25, 2, 55–64. Bettiol M., Burlina C., Chiarvesion M., & Di Maria E. (2017). Industrial Districts Firms do not Smile: Structuring the Value Chain between Local and Global. Advances in International Manage- ment, 30, 269–291. Bettiol, M. et al. (2019). Globalization strategies and economic performance in Italian industrial district. In F. Puig, B. Urzelai (eds). Economic Clusters and Globalization: Diversity and Resilience. (pp. 113–134). Routledge: Abingdon. Brioschi, F., Brioschi, M.S., & Cainelli, G. (2002). From the Industrial District to the District Group. An Insight into the Evolution of Local Capitalism in Italy. Regional Studies. 36, 1037–1052. doi: 10.1080/0034340022000022521 Buciuni, G., & Pisano, G. (2018). Knowledge Integrators and the Survival of Manufacturing Clusters. Journal of Economic Geography, 18(5), 1–21. doi: 10.1093/jeg/lby035 Busato, A., & Corò, G. (2011). District in the Crisis: Declining, Adapting or Innovating? Argo- menti= Arguments, 32, 71–84 (in Italian). Cainelli, G. (2008). Industrial districts: theoretical and empirical insights. In C. Karlsson (Ed.). Handbook of Research on Cluster Theory (pp. 189–202). Cheltenham: Edard Elgar Camagni, R., & Capello, R. (2013). Regional Competitiveness and Territorial Capital: a Con- ceptual Approach and Empirical Evidence from the European Union. Regional Studies, 47(9), 1383–1402. doi: 10.1080/00343404.2012.681640 Caracausi, A. (2017). Information asymmetries and craft guilds in pre-modern markets: evi- dence from Italian proto-industry. Economic History Review, 70 (2), 397–422. doi: 10.1111/ehr.12380 Celetti, D. (2015). Peasants’ Destinies. Rural Families and Economic Transformations. In Frabrice Boudjaba (Ed.). Work and rural Families (pp. 225–244). Rennes: PUR (in French). Celetti, D. (2019). Diffused Urbanization and Industrial Cluster in North-Eastern Italy: why Territory still matters in the Globalized World Economy?. In I. Turghel, H. Wiesmeth, V. Beker (Eds.). XIV International Conference Russia Regions in the Focus of Change – Book of Proceedings (pp. 162–171). Ekaterinburg: URFU. Celetti, D. (2019b). Italian Handicrafts in the Eurasian Markets. A Case Study from the Ceramic Cluster of Nove-Bassano (Vicenza-Italy). The Journal of Economic Research and Business Administra- tion, 128(2), 189–197. Confartigianato Imprese (2018). Studies Fashio. 11 July 2018 – In Italian. Retrieved from https:// www.confartigianato.it/2018/07/studi-moda Сoro’, G., & Grandinetti, R. (1999). Evolutionary patterns of Italian industrial districts. Human Systems Management, 18, 117–129. Coro’, G., & Micelli, S. (2007). The Industrial District as Local Innovation Systems. In Sadun A. Italy in the International Economy since the Second World War (pp. 425–458). Soveria Mannelli: Rubettino. Coro’, G., & Grandinetti, R. (2010). Frontiers and actors of development beyond the crisis: the labo- ratory of North-Eastern Italy. Economia e Societa’ Regionale = Regional Economy and Society, 2, 43–63. Corò, G., Schenkel, M., & Volpe, M. (2013). International Offshoring, Local Effects: An Inquiry on Italian Firms. Symphonya, 2, 1–13. Coro’, G. (2018). Italian industry in the new globalization. L’industria, 39, 347–356. doi: 10.1430/92509 Coro’, G., Schenkel, M., & Volpe, M. (2007). North Eastern Italy: Lookong for the lost model. L’industria = The Industry, 3, 441–461 (in Italian). http://doi.org/10.15826/recon.2020.6.2.007 https://tolinoreader.ibs.it/library/index.html#/epub?id=DT0245.9788831739504 https://tolinoreader.ibs.it/library/index.html#/epub?id=DT0245.9788831739504 http://doi.org/10.1080/0034340022000022521 http://doi.org/10.1093/jeg/lby035 http://doi.org/10.1080/00343404.2012.681640 http://doi.org/10.1111/ehr.12380 https://www.confartigianato.it/2018/07/studi-moda https://www.confartigianato.it/2018/07/studi-moda http://doi.org/10.1430/92509 R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 87 https://journals.urfu.ru/index.php/r-economy Online ISSN 2412-0731 Dunford, M. (2006). Industrial Districts, Magic circles, and the Restructuring of the Italian Tex- tile and Clothing Chain. Economic Geographic. 82(1), 27–59. Favero, G. (2012). The Network firm as Instrument of Risk Minimization: The Benetto Case. In Les sociétés méditerranéennes face au risque: économies (pp. 215–222). Il Cairo: Institut Française d’Archéologie Orientale (in Italian). Ferrario, V. (2013). Cultivated Spaces (Multifunctional). The Rural Space in the Transformation of contemporary cities. In A. Magnier, M. Morandi (Eds.). Landscapes in Transformation. The Land- scape approach to the Tansformation of the European City. Milano: Franco Angeli (in Italian). Fontana, G.L. (2004). Entrepreurs, Enteprises and Territories from the First to the Second In- dustrial Revolution. In G.L. Fontana (Ed.), The Vicenza’s Industry from the Middle Ages to Nowa- days (pp. 347–454). Padova: Cleup (in Italian). Fontana, G.L., & Riello, G. (2005). Seamless industrialization: The Lanificio Rossi and the Mod- ernization of the Wool Industry in Nineteenth Century Italy. Textile History, 36(2), 168–195. doi: 10.1179/004049605x61555 Fontana, G.L, Panciera, W., & Riello, G (2009). The Italian textile industry, 1600–2000: labour, sectors and products. In L.H. Van Voss, E. Hiemstra-Kuperus, E. Van Nederveen Meerkerk (Eds.). The Ashgate Companion to the History of Textile Workers, 1650–2000 (pp. 275–303). Ashgate, Farnham. Fontana, G.L. (2010). Made in Italy: between past and future. In G. Riello, P. Mcneil (Eds.). The Fashion History Reader. Global Perspectives (pp. 543–545). London, New York: Routledge. Forza, C., & Vinelli, A. (1997). Quick Response in the Textile-apparel industry and the Support of Information Technologies. Integrated Manufacturing Systems, 9(8), 125–136. doi: 10.1108/09576069710181947 Gilmore, J.H, & Pine, J. (2007), Authenticity: what Consumers Really want. Boston: Harvard Business School Press. Ketelhöhn, W. (1993). What do we mean by cooperative advantage? European Management Journal, 11(1), 30–37. doi: 10.1016/0263-2373(93)90021-9 Lacquement, G., & Chevalier, P. (2016), Territoire et développement des territoires locaux, en- jeux théoriques et méthodologiques de la transposition d’un concept de l’économie territoriale a l’analyse géographique. Annales de geographie, 711(5), 490–518. Leoni, G. (2017), Social responsibility in Practice: an Italian Case from the early 20th Century. Journal of Management History, 23(2), 133–151. doi: 10.1108/JMH-10-2016-0057 Lees-Maffei, G., & Fallan K. (2014). Made in Italy: Rethinking a Century of Italian Design. Lon- don: Bloomsbury. Magnani, G., Zucchella, A., & Strange, R. (2019). The Dynamics of Outsourcing Relationships in Global Value Chains: Prespectives from MNEs and Their Suppliers. Hournal of Business Research, 103, 581–595. Mariotti I., Barzotto M., Coro’ G., Saloriani S. (2020). Industrial Districts, Urban Areas or both? The Location Behaviour of Foreign and Domestic Firms in an Italian Manufacturing Region. The Annals of Regional Science. Special Issue Paper, 1–24. doi: 10.1007/s00168-020-00990-8 Merlo, E. (2011). Italian fashion business: Achievements and Challenges (1970s–2000s). Busi- ness History. 53(3), 344–362. doi: 10.1080/00076791.2011.565512 Merlo, E. (2012). The ascendance of the Italian fashion brands (1970–2000). In L. Segreto, H. Bonin, A.K. Kozminski, & C. Manera (Eds.), European business and brand building (pp. 137–154). Brussels: PIE Peter Lang. Merlo E. (2015). ‘Size Revolution’: The Industrial Foundation of the Italian Clothing business. Business History, 57(6), 919–941. doi: 10.1080/00076791.2014.992336 Merlo, E. (2018) Italian Luxury Goods Industry on the Move: SMEs and Global Value Chains. In: P.Y. Donzé, R. Fujioka (Eds.), Global Luxury (pp. 39–63). Singapore: Palgrave. doi: 10.1007/978- 981-10-5236-1_3 Mistri M. (2009). The industrial district as a local evolutionary phenomenon. In G. Becattini, M. Bellandi, L. De Propris (Eds.), A Handbook of Industrial Districts (pp. 193–203). Cheltenham: Elgar. http://doi.org/10.15826/recon.2020.6.2.007 http://doi.org/10.1179/004049605x61555 http://doi.org/10.1108/09576069710181947 http://doi.org/10.1016/0263-2373(93)90021-9 http://doi.org/10.1108/JMH-10-2016-0057 http://doi.org/10.1007/s00168-020-00990-8 http://doi.org/10.1080/00076791.2011.565512 http://doi.org/10.1080/00076791.2014.992336 http://doi.org/10.1007/978-981-10-5236-1_3 http://doi.org/10.1007/978-981-10-5236-1_3 88 https://journals.urfu.ru/index.php/r-economy R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 Online ISSN 2412-0731 Ortega-Colomer, Francisco Javier, Molina-Morales, Francesc Xavier, Fernández de Lucio, Igna- cio. (2016). Discussing the Concepts of Cluster and Industrial District. Journal of technology manage- ment & innovation, 11(2), 139–147. doi: 10.4067/S0718-27242016000200014 Palan, N. (2010). Measurement of Specialization. The choice of Indices, FIW Working Paper. De- cember, 1–38. Paris, I. (2006). Stitched objects. Ready-made clothing in Italy from the first post-war period to the 1970s. Milano: Franco Angeli (in Italian). Porter, M.E., Ketels, C.H.M. (2009). Clusters and Industrial Districts: Common Roots, Different Perspectives. In G. Becattini, M. Bellandi, L. De Propis (Eds.) A Handbook of Industrial Districts (pp. 172–183). Cheltenham: Edward-Edgar. Riello, G. (2013). The Italian Textile Industry, 1600-2000. Labour, Sectors, and Products. In The Ashgate Companion to the History of Textgile Workers. 1650–2000 (pp. 247–304). Farnham: Ashgate. Roverato, G. (2004). Vicenza’s Industry in the 20th century. In G.L. Fontana (ed.) History of Vicen- za’s Industry from Medieval Time to the Present (pp. 455–543). Padova: Cleup (in Italian). Rovizzi, L., & Thomson, D. (1992). Fitting Company Strategy to Industry Structure: A Strate- gic Audit of The Rise of Benetton and Stefanel. Business Strategy Review, 3(3), 73–99. doi: 10.1111/ j.1467-8616.1992.tb00036.x Scarpellini, E. (2019). Italian Fashion since 1945: a Cultural History. Champ, Plagrave. Tait, N. (1998). From small-scale weaving to world-leading. Apparel International. 29(7), 10–11. Tattara, G., & Crestanello, P. (2011). Industrial Cluster and the Governance of the Global Value Chain. The Romania-Veneto Network in Footwear and Clothing. Regional Studies, 45(2), 187–203. doi: 10.1080/00343401003596299 Volpe, M., Corò, G., & Schenkel, M. (2012). International Openness and Structural Change in the Manufacturing Systema of North Eastern Italy. L’industria, 1, 193–204 (in Italian). Whitford J. (2001). The decline of a model? Challenge and response in the Italian Industrial Districts. Economy and Society, 30, 38–65. Information about the author David Celetti – PhD in Economic History, Research Professor, Professor of Local Develop- ment, Chair of Economic History, at the Department of Historical, Geographical Sciences and of the Antiquity of the University of Padua (Via 8 Febbraio 1848, 2, 35122 Padova, Italy); e-mail: david.celetti@unipd.it ARTICLE INFO: received March 9, 2020; accepted May 5, 2020 Информация об авторе Челетти Давид – PhD в экономической истории, профессор-исследователь, профессор департамента исторических, географических наук и древности Падуанского университета (35122, ул. 8 февраля 1848, 2, Падуя, Италия); e-mail: david.celetti@unipd.it ИНФОРМАЦИЯ О СТАТЬЕ: дата поступления 9 марта 2020 г.; дата принятия к печати 5 мая 2020 г. http://doi.org/10.15826/recon.2020.6.2.007 http://doi.org/10.4067/S0718-27242016000200014 http://doi.org/10.1111/j.1467-8616.1992.tb00036.x http://doi.org/10.1111/j.1467-8616.1992.tb00036.x http://doi.org/10.1080/00343401003596299